December 28, 2007

 

CBOT Corn Outlook on Friday: Firmer on e-CBOT, strong export sales

 

 

A firmer close on Thursday, gains in overnight trade and solid export business could lift corn futures at the Chicago Board of Trade on Friday, the last full trading day of the year.

 

Most-active March corn is called to open 1-2 cents firmer. In electronic trade, March corn on e-cbot was up 3/4 cents a bushel to US$4.55 1/2. March corn set a new contract high of US$4.56 1/2 in overnight trade.

 

The U.S. Department of Agriculture released export sales for the week ended Dec. 20 on Friday. The government said corn sales for 2006-07 were 1.42 million metric tonnes. This compared to trade estimates of 900,000 to 1.200 million tonnes. The sales report was delayed one day because of the Christmas holiday.

 

USDA said the sales total was 22% above the previous week and 9% over the prior 4-week average. Major purchasers included Japan, which bought 425,200 tonnes, including 45,000 MT switched from unknown destinations; Mexico bought 186,500 tonnes. Corn sales of 168,800 tonnes were sold to unknown destinations. The business was partially offset by a cancellation by Tunisia of 29,000 tonnes.

 

"We're seeing some fairly aggressive pricing (by importers)," said John Kleist of Kleist Ag Consulting. "At some point they're going to cry uncle, but it's ambiguous when that'll happen."

 

Friday is the last full trading day of 2007. The CBOT closes trade early on Monday and is shuttered Tuesday for New Year's Day.

 

One interesting market tidbit is that corn has closed steady or higher in 18 of the last 19 sessions, said Brian Hoops of Midwest Market Solutions.

 

Kleist noted there's been very little profit taking in corn, as borne out by gains in open interest. Preliminary open interest for corn showed a rise of 9,497 contracts in Thursday's trade. "We continue to see spec buying as we make contract highs," he said.

 

A technical analyst said Thursday's settlement at the highs is a bullish signal and could lend support. Near-term resistance lies at US$4.55 and then US$4.60. On the downside, first support comes in at Wednesday's low and a gap top at US$4.47. Below there, additional support lies at US$4.44 1/2, the Dec. 24 high and gap bottom.

 

In other news, China plans to sell 500,000 tonnes of corn from state reserves next week to stabilize market prices, the National Grain & Oil Trade Center said late Thursday. This is the fourth batch of corn that China plans to sell after selling a total 426,000 tonnes from the first three batches, or 28% of the 1.5 million tonnes it planned to sell.

 

DTN Meteorlogix weather firm said A few thunderstorms have developed overnight in Argentina's northern La Pampa and in Cordoba. The forecast calls for a chance for a few more afternoon thundershowers Friday for Cordoba and also for Sante Fe province. The longer-term outlook remains warm and dry.